GDP grows by 0.5 per cent in the first quarter of 2019, according to the Office for National Statistics quarterly national accounts out today. Small businesses are, without any doubt, major players to keep the UK economy thriving. However, banks continue to overlook SMEs financial needs, especially when it comes to borrowing to fund their working capital requirements and, ultimately, grow their businesses.
As GDP grows, the largest contributors to this increase are the 5.7 million small businesses in the UK today – making up 99 per cent of businesses in the UK economy. SMEs continue to be the main driving force behind employment and innovation – providing 16.3 million jobs in 2018 alone, 60 per cent of all private sector employment in the UK.
Despite their evident importance and contribution, SMEs continue to be overlooked by banks – especially when it comes to borrowing to fund their working capital requirements and, ultimately, grow their businesses.
This has been capitalised on by fintech and challenger banks, as they increasingly offer cutting-edge financial planning tools and advice to SMEs. Cloud-based Tide now claims over 1.4 per cent of the UK’s SMEs as clients and is aiming for 8 per cent market share by 2023. In fact, according to Sifted, in the UK, the main contenders are the aforementioned Tide (focused solely on SMEs, small or medium-sized companies) and Starling (which has retail accounts as well). Banks are under pressure to salvage their relationship with SMEs, currently not the top priority for relationship managers.
Rupa Ramamurthy, Executive Vice President at Teleperformance D.I.B.S, comments: “Traditional banks are increasingly realising that SMEs need tailored solutions compared to larger businesses who want a broad set of services such as international trade management and advisory counsel – which is something banks are more readily equipped to do.”
“The first thing that’s an issue for a small or medium sized enterprises is cash flow – most small business owners find it difficult to track and forecast their flow. They require banks to be a strategic advisor and product specialist who can help them to navigate through their cash flow journey and enable them to fulfil their growth ambitions.”
Rupa continues, “84 per cent of SMEs want financial planning and business growth advice delivered digitally, but only 17 per cent of banks currently offer digital financial management tools. Banks have a real opportunity to capitalise on SMEs’ need for advice, helping small business clients manage risk, business plans and cash flow.”
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.